On Monday, oil prices retreat after posting gains in four straight months due to the risks of the delta variant of coronavirus and the slowdown in China.
US WTI slipped by 1% after soaring by 2.6% last week. Brent’s prompt time spread was 80 cents/barrel in backwardation. The gap was 79 cents a barrel on the first trading day of July.
Across the Asia-Pacific, the delta variant continues to reverberate, clouding the outlook for mobility. China has posted insignificant raises in cases, Thailand will impose quasi-lockdown measures, and infections in hot spot Sydney matched a record.
Economist Warren Patterson of ING Group commented, “While the number of cases in China is still low, we are seeing fairly strict measures taken in certain cities, and so that that will do little to help sentiment.”
Meanwhile, the rise in tensions between Iran and the US has been attracting attention following Washington’s formally blaming Tehran for an attack on an Israel-linked oil tanker, warning of an appropriate response.
Going forward, Patterson opined oil prices are predicted to mostly stay within range as inventory draws limit the downside, while the market lacks a catalyst to push higher. This quarter, Brent is likely to average USD75/barrel.
In the US, stockpiles in the Cushing hub have hit the lowest level since January 2020. On the other hand, the Organization of Petroleum Exporting Countries and allies (OPEC+) have largely followed through with plans to ease supply curbs, with an additional 400,000 bpd to be released this month.
Meanwhile, in India, sales of diesel, an indicator for the country’s economic activity, remained below pre-virus levels last month due to the slow rollback of some restrictions following a deadly wave of coronavirus. According to local researches, India might see another wave of infections set to peak in October.
